Benchmark indices whipsawed in trade on Thursday, the day of weekly F&O expiry, as geopolitical tensions between Ukraine and Russia remained unabated. Besides, Brent crude prices above $120 per barrel also added to investor woes. The frontline S&P BSE Sensex gyrated 690 points intra-day before settling at 57,596, down 89 points or 0.15 per cent. The Nifty50, on the other hand, ended at 17,223, down 23 points or 0.13 per cent. The 50-share index had touched an intra-day high and low of 17,292 and 17,091, respectively. Here is a list of four smallcap stocks suggested by Angel One Ltd. which could give up to 63 per cent upside:
Suprajit Engineering |BUY| CMP: Rs 331| TP: Rs 485| Upside: 47%
Suprajit Engineering (SEL), is the largest supplier of automotive cables to the domestic OEMs with a presence across both 2Ws and PVs. SEL over the years has evolved from a single product/client company in India to have a diversified exposure which coupled with its proposition of low-cost player has enabled it to gain market share and more business from existing customers.
SEL has outperformed the Indian Auto industry in recent years (posting positive growth vs low double-digit declines for the domestic 2W and PV industry in FY21). The company believes that consolidation of vendors and new client additions would help in maintaining the trend of market/wallet share gains. SEL has grown profitably over the years and as a result, boasts a strong balance sheet (net cash). We believe SEL is a prime beneficiary of a ramp-up in production by OEMs across the globe and is well insulated from the threat of EV (is developing new products). Its premium valuations are justified in our opinion owing to strong outlook and top-grade quality of earnings.
Stove Kraft |BUY| CMP: Rs 644| TP: Rs 1,050| Upside: 63%
Sobha Limited |BUY| CMP: Rs 728| TP: Rs 1,50| Upside: 44%
The company operates in Residential & Commercial real-estate along with Contractual business. Companies 70 per cent of residential pre-sales come from the Bangalore market which is one of the IT hubs in India, we expect new hiring by the IT industry will increase residential demand in the South India market. We have seen a strong consolidation among listed players in India, post-Demon, RERA, IL&FS crisis.
Listed players have gained market share in new launches in the last 2-3 years, we expect this to continue in coming quarters. Ready to move inventory, and under construction inventory levels have moved down to their lowest levels. Customers are now having a preference towards the branded players like Sobha Developers Company expected to launch 17 new projects/phases spread over 12.56mn sqft across various geographies. The majority of launches will be coming from existing land banks. Company having land bank of approx. 200mn Sqft of salable area.
Ramkrishna Forgings |BUY| CMP: Rs 167| TP: Rs 256| Upside: 53%
Ramkrishna Forgings (RKFL), a leading forging player in India and among a select few having heavy press stands to benefit from a favorable demand outlook for the Medium & Heavy Commercial Vehicle (M&HCV) industry in domestic and export markets in the near term. The company has phased out its CAPEX over the past few years during which it was impacted by industry slowdown in certain periods. With the end to the CAPEX cycle, the favorable outlook in the medium term, and sufficient capacity in place, we believe RKFL volumes would be able to post volume CAGR of 29 per cent over FY21-23E. RKFL has been able to add new products which have higher value addition. Better mix along with operating leverage is expected to result in ~550 YoY bps EBITDA margin improvement in FY22E. Aided by strong volumes and profitability as well as balance sheet deleveraging, we expect the RKFL’s earnings to jump 10-12x in FY23E-24E from FY21 levels.
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